City leaders have been warning for months that this year’s budget will have to account for the rising costs of city services; now they’re also projecting significantly slower revenue growth as well.
On Thursday, San Antonio City Council got its first look at how those dynamics are playing out in their proposed 2025 budget, where city staff is already suggesting $36.6 million in spending reductions over the next two years.
The council must approve a budget for the 2025 fiscal year, which starts Oct. 1, by Sept. 19.
But revenue and expenses are both still very much in flux, staff says, as the cost of the city’s firefighters’ contract remains up in the air, and sales tax and property tax revenues continue coming in lower than expected.
A trial budget in May identified a $10.6 million shortfall over the next two years, something staff was able to make up for when crafting this year’s proposed budget. But the city is now projecting that its overall revenue will be down about $68.1 million from what it expected over the course of three years, meaning more tough spending decisions are likely on the horizon.
“[We’ll have to] slice and dice to meet the community’s priorities, and there’s not a lot of flexibility in that process,” Mayor Ron Nirenberg told reporters after Thursday’s meeting.
“Public safety, infrastructure, parks — the core services of our community — are what are going to receive most of the funding,” he added. “There’s very little else for us to be able to accomplish beyond those core services.”
The city isn’t currently planning to cut city services or employees, City Manager Erik Walsh said, nor is it planning to raise the city’s property tax rate this year.
But unlike the past two budgets, in which the city implemented new property tax exemptions and cut its tax rate to keep its explosive revenue growth in line with the state’s 3.5% cap, this year, slower growth in property appraisals means the city likely won’t even take in the amount it’s legally allowed to collect from property taxes.
Sales tax is also coming in much lower than recent years, and the millions in federal pandemic relief that’s buoyed the city budget in recent years is drying up.
The $3.96 billion proposed budget is still projected to be a 5.8% increase from the city’s $3.7 billion 2023 budget. That number factors in raises for civilian and uniformed employees, including roughly a 7% pay increase for firefighters. (The firefighters’ union is requesting a contract that would cost an additional $12.3 million — funds that aren’t currently accounted for in the budget proposal.)
Tough spending conversations are likely to come over the next month if City Council wants to give more to the firefighters, or add new spending during the budget amendment process.
Past councils have been able to divvy up significant surpluses from the city-owned utility company, CPS Energy, to cover their pet priorities, but this year members agreed to direct that money toward mitigating future rate increases.
Sinking sales tax revenue
Among one of the biggest hits to this year’s budget has been lower-than-expected sales tax revenue, according to city staff.
A presentation from city staff showed sales tax growth at 14.2% in 2022. In the years after that, it was between 2% and 3%.
“Just judging from what my kids and my wife buy on Amazon, I feel like spending is up,” said Councilman Manny Pelaez (D8), who represents the Northwest side. “What do you attribute that to?”
Walsh said other major Texas cities are in the same boat, due in part to “uncertainty about the future and less disposable income.”
“We’re coming off the last couple of years where spending was abnormally high in terms of our historical aspect,” Walsh said. “I think part of it is fear of recession or the election. … Consumer confidence is cautious right now.”
Spending priorities for the city
Earlier this year the City Council met for an all-day budget planning session where they named their top priorities: public safety, infrastructure, homeless, employees, animal care services, housing and small businesses.
Separately, this year the city paid for a professional survey of residents’ priorities, which indicated that the community is most eager to see it address streets, homeless
encampment cleanups, services to assist those experiencing homelessness, sidewalks and police
services.
Walsh said that feedback was used to formulate Thursday’s proposed budget, which directs just over $1 billion to police and fire. It also includes money for additional Animal Care Services officers, city-funded spay/neuter surgeries for owned dogs and cats, homeless encampment sweeps, housing services and roughly 1,600 street projects.
Where San Antonio is making cuts
The city’s budget proposal includes $36.6 million in spending reductions, which Walsh chalked up to eliminating inefficiencies. Examples include:
- Eliminating overtime shifts for enforcement of e-scooters
- Cutting an inspection staff for boarding houses, of which there are now only seven in San Antonio
- Scaling back spending on the workforce development program, Ready to Work, from the city budget. The program will still receive the money voters approved for it from sales tax
- Reduced funding for business development organizations
- Eliminating funding for a homeless mobile shower unit
- Forgoing contributions to the city’s general fund contingency
How residents can weigh in on San Antonio’s 2025 budget
The proposed budget is available to view online. Members of the City Council will have 12 budget work sessions in the coming weeks to more closely examine the spending plans for individual departments. They are open to the public and will be streamed online.
Starting next week, city staff will host 11 town halls located throughout the city where residents can provide feedback before the City Council votes on the final budget.
They will be:
- Monday, Aug. 19 at 6:30 p.m. at Wheatley Heights Sports Complex – 200 Noblewood Drive, 78220 (District 2)
- Monday, Aug. 19 at 6:30 p.m. at Miller’s Pond Community Center – 6175 Old Pearsall Road (District 4)
- Tuesday, Aug. 20 at 6:30 p.m. at Central Library – 600 Soledad St., 78205 (District 1)
- Tuesday, August 20 at 6:30 p.m. at Walker Ranch Senior Center – 835 W Rhapsody Drive, 78216 (District 9)
- Monday, Aug. 26 at 6:30 p.m. at Normoyle Community Center – 700 Culberson Ave., 78225 (District 5)
- Monday, Aug. 26 at 6:30 p.m. at Northeast Senior Center – 4135 Thousand Oaks Drive, 78217 (District 10)
- Wednesday, Aug. 28 at 6:30 p.m. at Cuellar Community Center – 5626 San Fernando St., 78237 (District 6)
- Wednesday, Aug. 28 at 6:30 p.m. at Garza Community Center – 1450 Mira Vista, 78228 (District 7)
- Thursday, Aug. 29 at 6:30 p.m. at Southside Lions Senior Center – 3303 Pecan Valley Drive, 78210 (District 3)
- Thursday, Aug. 29 at 6:30 p.m. at Phil Hardberger Urban Ecology Center – 8400 NW Military Hwy., 78231 (District 8)
- Saturday, Aug. 31 at 10:30 a.m. Central Library – 600 Soledad St., 78205 (Youth budget town hall)
